Thursday, 20 August 2015

The falls were mostly attributed to concerns over China, although Chinese stocks themselves finished the day up. The Shanghai Composite Index rose 1.2 percent on Wednesday, in the process rebounding from a plunge of more than five percent earlier in the session.

Government support was suspected for the rebound. “Only the 'national team'... would be able to turn the tide like this,” Yingda Securities analyst Li Daxiao said.

Indeed, some analysts think that 3,500 may be the level around which government support appears. From Bloomberg:

Signs of government buying have appeared at that level on the Shanghai Composite Index at least four times over the past six weeks. The latest example came on Wednesday, when the gauge posted an intraday rally of 6.6 percent after falling to as low as 3,558.38.

That could make the 3,500 level a make-or-break one. As Nelson Yan, chief investment officer at the Hong Kong unit of Changjiang Securities Co. said: “Any inaction could trigger a new round of selling.”